Risk and Due Diligence
Field Partners are the critical on the ground link to entrepreneurs
|
137 Field Partners in 54 countries |
Each entrepreneur requesting a loan through Kiva has successfully completed an application process conducted by a local microfinance institution (MFI). These MFIs have entered into a Partnership Agreement with Kiva to become one of our Field Partners, who are responsible for the distribution and collection of your loan. |
Field Partner Role #1: Screen entrepreneurs and post loan requests on Kiva | |
|
Kiva Field Partners work in impoverished areas to screen and approve entrepreneurs who demonstrate a need for a loan and a reasonable likelihood of repayment. Over the last 30 years 100 million entrepreneurs have been reached by such organizations and data suggests that the poor can be quite credit worthy (+95% repayment rates) if the Field Partner employs the proper screening methodology. One common methodology is to lend to entrepreneurs who belong to a borrowing group (e.g. a group of 5 women from the same village who know each other well). Loans to one member of the group are contingent on the other group members repaying on time. Because each member's livelihood depends on other members' repayment, a form of peer monitoring and support develops which helps ensure high repayment rates. Loans directly to individual entrepreneurs are also common, especially as the entrepreneur proves their credit-worthiness in a group setting. |
Field Partner Role #2: Disburse and collect your loan | |
 |
When you lend to an entrepreneur, Kiva wires the funds to the local Field Partner to administer your loan. Field Partners disburse the loan to the entrepreneur and after a grace period begin collections. Typically, loan officers will travel out to the entrepreneur's location (e.g. rural village) and collect a repayment on a monthly basis. Most of the time, entrepreneurs are able to pay the loan officer on time the full amount due without any issues. On occasion, an entrepreneur may be late in payments. You can view for any Field Partner the percentage of Paying Back loans that are over one month late in repayment. This is an indicator of how successful their collections efforts are. Once funds are collected, the Field Partner wires funds back to Kiva and Kiva's software automatically distributes the repayments to each internet lender.
Repayment Collection and Currency RiskWhen lending funds across national boundaries, an implicit risk exists with currencies changing relative to one another. The local currency in the Field Partner's country of operation may, for many reasons, lose some of its value relative to the USD, thus requiring the Field Partner to use more of its local currency to reimburse Kiva (Kiva’s working currency is the US Dollar).As a means of encouraging responsible lending, Kiva offers Field Partners the option to protect themselves against these currency fluctuations. In cases where the US Dollar appreciates by more than 20% relative to a local currency, Field Partners who opt for currency exchange loss protection will only be responsible for covering the first 20% of the local currency cost of appreciation while lenders will cover the remainder of the cost. This ensures the sustainability of the Field Partner in difficult economic climates and allows the Field Partner to continue funding local entrepreneurs. Note that this risk is not present in loans disbursed in US Dollars. |
Field Partner Role #3: Report impact and issues surrounding your loan | |
 |
In addition to loan screening and administration, Field Partners document the impact of your loan in the form of Journals. Journals provide insight into the entrepreneur's progress and challenges. It is a key point of connection between Kiva's lenders and their business partner across the world. |
| 
